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BUDGETING - Coggle Diagram
BUDGETING
Budgeting systems
budgetary period normally includes the fiscal year
Annual budgets
usually
subdivided
months
weeks
quarters of the year
begins several months prior end of the year
assigned to a budget committee
continuous budgeting
variation of fiscal-year budgeting
maintains a 12-month projection
Methods of developing budget
estimates
zero-based budgeting
start with last year’s
budget and revise it
Objectives
Establishing specific goals
Executing plans to achieve the goals
Periodically comparing actual results vs. goals
Human behavior problems
Budget Goals Too Tightly
Attainable goals are more likely to motivate
employees and managers
Budget Goals Too Loosely
slack budgets may create inefficiency
Conflicting Budget Goals
Company's goals and employees interest will never meet
Affects
Planning
Directing
Controlling
Budgets
Static budget
shows expected results for only one activity level.
Once determined, it is not
changed, even if the activity changes.
Flexible budget
shows expected results for several activity levels.
Master budget
Integrated set of operating and financing budgets for a period of time
Integrated by
Financial budget
Cash budget
Capital expenditures budget
Operating budget
Cost of goods sold budget
Production budget
Direct materials purchases budget
Direct labor cost budget
Factory overhead budget
Selling and administrative expense budget
Sales budget